That is the important thing query that may decide whether or not stimulus cash overheats the financial system

The question that still looms in the financial markets is to what extent the $ 1.9 trillion coronavirus relief is either spent immediately or whether the virus is going back enough for shoppers to and want to be allowed in.

This column previously referred to surveys conducted by both how the initial $ 600 stimulus was used and plans for the $ 1,400 that have arrived for many households, to suggest that a large part of it is not used in the economy.

Another view is when households perceive the incentive as additional income or wealth. Studies have shown that the propensity to spend from wealth is only 5%, while the propensity to spend from income is between 10% and 50%. after a recent speech by Gertjan Vlieghe, a voting member of the Bank of England’s Monetary Policy Committee.

Dhaval Joshi, chief strategist at BCA Research, says whether the new incentive is viewed as wealth or income depends on whether the household receiving it is initially low or high income. However, looking at previous stimulus checks, there were no significant changes in either consumption or inflation.

Accordingly, he believes that market expectations for inflation will be carried away. He also says – in a note written before crude oil prices plummeted Thursday – that inflation expectations correlate positively with high commodity prices, although actual inflation tends to fall when commodity prices are high.

“Given that the bond market is useless for predicting inflation, it is also useless for assessing real interest rates,” he says. If the bond market exaggerates future levels of inflation, the correct inflation-adjusted bond yield should be even higher. “The most important thing right now is that stocks and other risk-weighted assets are even more expensive than they appear compared to real bond yields.”

Frosty talks in China

Conversations between The US and China got off to a frosty start in Alaska. with public criticism from every side in the opening speeches.

FDX, -0.88%
can after climbing According to delivery service, earnings in the third quarter of the fiscal year rose by more than analysts expected and led for a stronger current quarter than expected.

OF, -1.14%
can slip after The apparel maker saw slower sales growth than expected in the third quarter of the fiscal year.

CB, -2.63%
made one $ 65 per share is offering to buy competing insurer Hartford Financial services group
HIGH, + 18.71%.

The Bank of Japan has removed the targets for buying exchange-traded funds and real estate mutual funds and has expanded the range in which 10-year bonds can be traded.

Oil recovers a little

Slightly sweet crude oil futures were traded after crude oil prices plummeted 7% on Thursday
CL.1, -0.32%
were a little higher. UBS analysts say to focus on the pace of COVID-19 vaccinations, which should help ease restrictions and support oil demand.

The return on the 10-year treasury
TMUBMUSD10Y, 1.686%
fell slightly to 1.69%. US stock futures
ES00, + 0.20%

NQ00, + 0.53%
were higher.

Bitcoin flows reflect the stock flows

Is bitcoin
BTCUSD, + 2.72%
a diversifier? It’s a big debate in the markets that several major banks have taken on over the past two weeks. Sven Henrich, the technical analyst Who operates the Northman Trader website?, created this chart and showed that the correlation between weekly inflows into Bitcoin and stocks is at its highest level ever.

Random readings

The tulip craze of the 17th century is often quoted by financial market analysts when it comes to speculative manias. For irony loversthere are no fungible tulips – that is, images of tulips sold on the blockchain – for sale.

A shark with wings? Scientists puzzled over fossils found in Mexico.

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